Anonymous
Post 01/20/2014 09:02     Subject: One-time lump sum into VA 529—tax question
Anonymous wrote:So,etching to remember about the gift tax is that the $14k limit just triggers having to report it to the IRS. You can defer paying the taxes on it to see if you hit the lifetime exclusion limit whic is $5.34 million. So if you don't anticipate gifting that much over your lifetime to your son, then you can safely not pay the gift tax now and apply it towards your lifetime exclusion.
See http://www.nolo.com/legal-encyclopedia/the-federal-gift-tax.html for a better explanation.


Isn't the 529 still owned by the parent? Where is the gift in this scenario?
Anonymous
Post 01/19/2014 14:42     Subject: One-time lump sum into VA 529—tax question
So,etching to remember about the gift tax is that the $14k limit just triggers having to report it to the IRS. You can defer paying the taxes on it to see if you hit the lifetime exclusion limit whic is $5.34 million. So if you don't anticipate gifting that much over your lifetime to your son, then you can safely not pay the gift tax now and apply it towards your lifetime exclusion.
See http://www.nolo.com/legal-encyclopedia/the-federal-gift-tax.html for a better explanation.
Anonymous
Post 01/19/2014 14:20     Subject: One-time lump sum into VA 529—tax question
Anonymous wrote:Can you deduct $8K if you put $4K into accounts for two kids?


Yes. It's 4K per child per account for each parent.
Anonymous
Post 01/19/2014 12:00     Subject: One-time lump sum into VA 529—tax question
Can you deduct $8K if you put $4K into accounts for two kids?
Anonymous
Post 01/19/2014 11:57     Subject: One-time lump sum into VA 529—tax question
Anonymous wrote:Son has a 529 plan in Virginia. Bought in VA so I could deduct $4K each year from taxes since we are residents. After selling a house this year, I’d like to pour money into his 529. I know the most I can do is $70K to avoid gift tax ($14K max/year split over five years). But I’m a little confused on these specifics: If I buy $70K in one transaction, that means I can’t contribute anything else for the next five years, correct? But can I still deduct $4K on my VA taxes for 2014-2018? A little more background—my son is 2 and I’m maxed on retirement, 6 month savings, etc so I thought this would be a good place to park some money. Feel free to comment on this plan of action-I know you DCUM-ers are not shy about opinions and I can appreciate all points of view! Thank you!


Remember that it's 4K per year per account. There are 4 different types of accounts in VA - 2 investment, 1 prepaid, 1 cash and . You could spread the money into all 4 accounts and deduct 16K per year, if this investment makes sense for you. But given the age, I think the first 3 accounts would make more sense than the cash option. I know at least one person that actually does this. Wish I could personally afford to do this..

I'm not a tax/investment professional so please check with yours.
Anonymous
Post 01/10/2014 15:42     Subject: One-time lump sum into VA 529—tax question
if you are married you can give more
Anonymous
Post 01/10/2014 15:23     Subject: One-time lump sum into VA 529—tax question
The gift tax limit is per person, so your spouse/other parent can contribute another 14k/year or 70k with the 5 year upfront.

As far as the va deduction, you can deduct 4k/year per account. The state defines "account" differently for inVEST, college America, and prepaid accounts. For college America and prepaid they basically treat each account owner/beneficiary combination as one account. For inVEST they treat each investment portfolio within each account owner/beneficiary account as a separate account.

Any amounts in excess of the deductible amount carryover to the next year(s).

If you Google "va ruling 10-240" it has some examples you can read through.
Anonymous
Post 01/10/2014 15:15     Subject: One-time lump sum into VA 529—tax question
you can only deduct $4k max each year, but VA has a carry-forward option (carry forward to deduct $4k next year, the following year, etc). I just read about this, and the example given was for an $8k contribution (so deduct $4k for one calendar year, then $4k the next calendar year).

You can also deduct $4k per year per account. So if you own four accounts, you can put deduct up to $16k (assuming you put $4k in each individual account). Perhaps open a few more accounts. ???
Anonymous
Post 01/10/2014 15:12     Subject: One-time lump sum into VA 529—tax question
I'm more familiar with the DC plan, but my understanding is you got it right.

In DC it would work like this:

Contribute $70K lump sum
You can deduct the $4K a year for 2014 to 2018 (note that if you are married, you could both take the deduction)
You cannot contribute for five years
Anonymous
Post 01/10/2014 14:54     Subject: Re:One-time lump sum into VA 529—tax question
Ugh, as a professional but not mine--she got this question wrong last year and we have to correct it this year. I still don't know what's going on.
Anonymous
Post 01/10/2014 14:49     Subject: One-time lump sum into VA 529—tax question
Son has a 529 plan in Virginia. Bought in VA so I could deduct $4K each year from taxes since we are residents. After selling a house this year, I’d like to pour money into his 529. I know the most I can do is $70K to avoid gift tax ($14K max/year split over five years). But I’m a little confused on these specifics: If I buy $70K in one transaction, that means I can’t contribute anything else for the next five years, correct? But can I still deduct $4K on my VA taxes for 2014-2018? A little more background—my son is 2 and I’m maxed on retirement, 6 month savings, etc so I thought this would be a good place to park some money. Feel free to comment on this plan of action-I know you DCUM-ers are not shy about opinions and I can appreciate all points of view! Thank you!